Indonesia’s government has secured US$32.7 billion (S$44.2 billion) worth of investment commitments from United Arab Emirates businesses in various sectors, such as vaccine manufacturing and distribution.
The investments, announced last Thursday (Nov 4), came as President Joko Widodo visited the UAE to deepen a personal relationship he has forged with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan.
Foreign Minister Retno Marsudi said the 19 investment commitment deals involved cooperation between the Indonesian Investment Authority and Dubai-based multinational logistics company DP World.
State-owned oil giant Pertamina is expected to ink a deal on floating solar panels with Abu Dhabi-based renewable energy company Masdar.
Abu Dhabi artificial intelligence company G42 is also expected to invest in smart city initiatives, telecommunications and genomics laboratories. G42 visited Indonesia in September to meet its partners.
Indonesia and the UAE also agreed to speed up talks on a comprehensive economic partnership agreement (Cepa). After several rounds of negotiations that started in September, Mr Widodo expects the deal to be finalised as early as March next year.
The Cepa negotiations are part of the UAE’s aggressive attempt to open markets in fast-growing economies such as South Korea, Kenya, Ethiopia and Turkey.
With international travel set to rebound, both countries agreed to mutually recognise their Covid-19 vaccine certificates and to strengthen the travel corridor arrangement that has been in place since July last year.
“For the government-to-government (deals), there will be 10 agreements,” Ms Retno said in an online press briefing last Thursday. She said these included agreements on investment promotion, taxation, central bank cooperation, tourism and mangrove forest management.
Indonesia’s goods exports to the UAE accounted for less than 1 per cent of total exports in September, Statistics Indonesia data shows. Of the total foreign direct investment in the third quarter of 2021, the UAE also accounted for a very small fraction, with just US$5.8 million realised, Investment Ministry data shows.
Mr Fithra Faisal, an economist at the University of Indonesia, said the UAE’s small share in Indonesia’s exports and direct investment made the country a potential non-traditional market to tap, especially as both countries were predominantly Muslim.
“We are pursuing potential in the future, not just existing (trade and investment),” Mr Fithra told The Jakarta Post in a phone interview on Thursday. “We are expecting to raise services activities because the UAE is good at this.”
The business deals have been the main attraction for Mr Widodo. Fresh from high-profile stopovers at the Group of 20 (G-20) Summit in Italy and the United Nations COP26 climate change conference in Scotland earlier in the week, he chose to visit a country that has been highly receptive to his trade and investment agenda.
Upon his arrival in Abu Dhabi, the President met the Prince and invited him to be the guest of honour at the G-20 summit in Bali next year.
Prince Sheikh Mohammed, in turn, named a road after Mr Widodo, who reciprocated by naming a stretch of the Jakarta-Cikampek toll road after the Prince.
The two leaders also discussed Mr Widodo’s ambitious project to build a new capital city in East Kalimantan. The Prince leads a committee that oversees the construction of the new city.
“The two leaders agreed to follow up on the matter intensively at the technical level,” Ms Retno said.